Question

a) Use Repeatability Assumption to compare between three alternatives X, Y and Z at (MARR=18% per year). Project A B C Investment cost $90,000 $50,000 $35,000 Production rate per year 20,000 24,000 18,000 Price per unit $6 $2.8 $4 Annual expenses $6,000 $5,000 $4,000 Salvage value $10,000 $18,000 Useful life (years) 2 3 6

          a) Use Repeatability Assumption to compare between three alternatives X, Y and Z at
(MARR=18% per year).
Project
A	B	C
Investment cost	$90,000	$50,000	$35,000
Production rate per year	20,000	24,000	18,000
Price per unit	$6	$2.8	$4
Annual expenses	$6,000	$5,000	$4,000
Salvage value	$10,000		$18,000
Useful life (years)	2	3	6

a) Use Repeatability Assumption to compare between three alternatives X, Y and Z at
(MARR=18% per year).
Project
A B C
Investment cost 90,00050,000 35,000
Production rate per year 20,000 24,000 18,000
Price per unit6 2.84
Annual expenses 6,0005,000 4,000
Salvage value10,000 18,000
Useful life (years) 2 3 6

Added by Eugenia B.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Paul A.

Step 1

Net cash flow is the difference between the cash inflows and cash outflows for each year. For alternative X: Year 0: -90,000 (investment cost) Year 1: (20,000 * 6) - 6,000 = 114,000 - 6,000 = 108,000 Year 2: (20,000 * 6) - 6,000 + 10,000 = 114,000 - 6,000 + Show more…

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Please use PW method. a) Use the Repeatability Assumption to compare between three alternatives X, Y, and Z at (MARR = 18% per year). Project A B C Investment cost $90,000 $50,000 $35,000 Production rate per year 20,000 24,000 18,000 Price per unit $6 $2.8 $4 Annual expenses $6,000 $5,000 $4,000 Salvage value $10,000 $8,100 Useful life (years) 2 3 6